Penn Law Faculty Examine Health Care Ruling

July 05, 2012

The U.S. Supreme Court famously has the last word on what the Constitution means, but last week’s landmark decision on the Affordable Care Act has launched a vigorous, ongoing conversation about how the health care law will be implemented now that its major provisions have been upheld.

In the aftermath of the decision, we asked Constitutional and health law and policy experts at the University of Pennsylvania Law School to share their insights about what the decision portends for the scope of federal power to meet economic and social problems and the future of the nation’s health care system.

Theodore Ruger is a professor of law with expertise in constitutional law and health law and policy.

It is tempting to characterize any Supreme Court case that implicates the outer limits of national government authority in binary terms: as either a net “win” or a net “loss” for state sovereignty. In this zero-sum game the federal government’s gain is portrayed as the states’ loss, and vice versa. Such a mutually-exclusive conception of state and national power was held by many of our Framers, and remains prevalent in some other federal systems around the world, where the national government’s entry into a given regulatory sphere automatically negates provincial or local power over the same matter.

The Affordable Care Act (ACA) embodies, and the Supreme Court’s ruling last week reflects, a very different conception of American federalism that has become increasingly prevalent in the past half-century. The most important areas of state regulatory jurisdiction today reside within the broad expanse of federal authority, not in the dwindling hinterlands beyond its outer frontiers. Federal and state policy responsibility is concurrent and overlapping, not mutually exclusive. Nowhere is this more true than in the realm of health care policy, where states have retained their leading regulatory role even as the health care sector has grown to account for a sixth of our national economy.

The Affordable Care Act builds on this tradition of overlapping and cooperative federalism: it is a major federal law that reserves a major (and highly discretionary) role for state governments in its implementation and extension. By upholding the bulk of the ACA, the Supreme Court has given a green light to the states to use the ample discretion that the Act affords them in designing and implementing their health insurance exchanges.

The Obama administration has already promised to permit each state “maximum flexibility” in regulating insurance companies within the exchanges, and in structuring the exchanges themselves. Ironically, the greatest risk to state sovereignty contained in the ACA applies to those states that refuse to play ball at all – the ACA provides that states that fail to make any progress in setting up their own unique insurance exchanges will instead have a one-size-fits-all federal version imposed upon them after 2014.

The Supreme Court’s ruling on the ACA’s Medicaid expansion puts a further choice to states that is no less portentous for it being less clearly coerced: every state now must choose whether to “opt in” to the ACA’s expanded Medicaid terms that would require every state to cover almost all persons at or below 133% of the poverty line in return for unusually generous federal matching funding. For opt-in states, the federal government has promised to pay 100% of the cost of the expansion for its first three years, and 90% thereafter. A few states that led the litigation against the ACA will undoubtedly reject this generous deal on principle (some would say spite), thus making a political point on the backs of their poorest citizens. But for most states once the litigation dust settles the deal offered by the ACA may be too good to pass up.

In any event, after the decision last week states can no longer sit on the sidelines and decry the alleged encroachments of the ACA. The statute, and the Court’s opinion construing and amending it, have given them concrete and meaningful choices to make. As Chief Justice Roberts said in his controlling opinion: “The States are separate and independent sovereigns. Sometimes they have to act like it.”

Kermit Roosevelt is a professor of law with expertise in constitutional law and federal jurisdiction.

It’s hard to know what the consequences of the decision will be. The new limiting principles that the Court announced [with respect to the scope of federal power] will probably not be very meaningful unless there’s another conservative appointment that creates the will to push them further. The activity/inactivity distinction shouldn’t apply to many cases–it’s not often that people resisting a law can claim to be inactive–and it doesn’t make much sense in this one, since the people being regulated are active, as a group: the uninsured get emergency room treatment and don’t pay for it. The spending clause analysis is a little more sensible, although it depends on somehow distinguishing new federal funding from preexisting programs, but it too is likely to affect only a few cases.

It’s perhaps more interesting to speculate about why this happened. There’s some evidence–the style of the dissent, which uses “we” instead of “I”, and some references to Ginsburg’s opinion as a dissent–that suggest it was initially a majority. It looks as though Roberts initially voted to strike the law down and then switched sides. I’m not sure why that would have happened. I don’t think it’s because Roberts really is the moderate and restrained judge he promised to be at his confirmation hearings. If he were, he would have accepted the obviously correct commerce clause justification.

The alternative explanation is that he actually was concerned about the legitimacy of the court and the reaction to a decision that invalidated the entire law (which the four dissenters wanted to do) by a 5-4 party line vote. It seems as though he decided to write an opinion that was as favorable to the challengers as possible in terms of the law while not striking down the law. That may be based on apolitical concern for the court, or it may actually be based on a longer term assessment of partisan political outcomes. But it’s not the second coming of David Souter.

Tom Baker is Deputy Dean and the William Maul Measey Professor of Law and Health Sciences. On the day the decision was announced Baker spoke at a Leonard Davis Institute of Health Economics roundtable at Wharton Business School.

Some states are a lot more ready than others [to implement the law]. Basically everyone in most states has been holding their breath for months. California, Florida, Maryland, Colorado and Minnesota are moving ahead. A number of more “red” states have been quietly preparing.

The thing to keep in mind is that there is an enormous amount of money available for states that cooperate and, so, even some of the states that were mounting the lawsuits were thinking about how to make sure they got their share of that money if the Affordable Care Act went ahead.

[Setting up insurance exchanges] will be a scramble. This hiccup means that more of the states will have their exchanges run by the federal government because a state might have been waiting for a few months, and a few months makes a big difference. So I think we’re going to see a little less variation than we might otherwise have, because the feds will be running the exchanges for that state.